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How Hasbro's Transformers Transformed the Toy Biz

 

T.L. Stanley

Brandweek
February 10, 2008

 

Ready for Magic 8 Ball: The Movie?

It’s in the works (or, all signs point to yes), showing that the toy business isn’t just about playthings anymore.

Mattel, home to the iconic Magic 8 Ball, Hot Wheels, Barbie, Uno and other mega-properties, recently signed with Hollywood’s most powerful talent firm, Creative Artists Agency, to develop its brands into movies, TV, Webisodes and other media.

The move follows a flood of interest from major entertainment companies in turning toys into content, on the heels of the $700 million grossing Transformers, a Hasbro-owned franchise that spawned the third best-performing movie of ‘07. (Hasbro, not so incidentally, also has high-powered representation in the form of William Morris Agency, though CAA helped the toy maker get Transformers off the ground.)

“There’s a lot of power in content,” said Barry Waldo, vp-worldwide entertainment marketing and strategy at Mattel, which had set up the 8 Ball project with Universal and producer Tom Shadyac on its own. “But we won’t be making big toy commercials.”

Expanding a brand and staying relevant will be among the hot topics at Toy Fair ’08, kicking off Feb. 17 and continuing through Feb. 20 in New York. The show is expected to draw some 1,200 exhibitors showing as many as 7,000 new products and, for the first time, will include an “Inventor Center” where the next Furby might be percolating.

The annual trade show comes at a tough time for the industry. Last summer’s recalls and the lack of must-have toys stalled the business during the key holiday time, when some retailers rake in half their annual revenue. Essentially, traditional toys have been hovering around $20 billion in sales for the past five years, while videogames are skyrocketing, increasing 40% last year compared to ’06, with a record $18.8 billion in sales.

Some analysts expect recovery this year, but point out that more money devoted to tighter safety standards, more testing and bureaucracy means cash diverted from marketing. That could impact the bottom line.

Those not caught up in recall mania saw an immediate boost in their business at holiday and likely will continue to drive home that made-in-the-USA. message. Lego competitor K’Nex saw a 20% increase in its sales in December, compared to the prior year, with a locally-made focus that will continue to be its mantra.

Aside from issues, a few products may stand out amid the cacophony. Cat Schwartz, eBay gadget and toy director and founder of HiTechMommy.com, picks the portable microscope called EyeClops from Jakks Pacific, which already has been a top toy in its initial run but this year becomes wireless and adds an LCD screen. That means kids can take it outdoors, make movies out of their findings with its built-in digital camera and upload them onto a computer. “I think the companies that are taking adult-level products and scaling them down for kids are very smart,” Schwartz said. “EyeClops is not aggressive, it’s not mind-numbing. You’re learning something.”

She also expects to see a lot of Webkinz wannabes, remote control creatures with more innovations, and green themes all around, whether in toys themselves, packaging or both.
Green with a splash of edutainment, Discovery Kids is wiping the slate clean from the boutique days when it was sold at its namesake stores and becoming a mass market product line with night goggles, microscopes and other nature and science-based gadgets.

“It has built-in awareness and the halo of the Discovery Channel,” said Rich Maryanek of Big Tent, a licensing agency that worked with Discovery and Jakks Pacific on creating the products. “The toys did $200 million in volume at the Discovery Stores, and we thought it was a good time to re-imagine it for mass.”



 

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